2017 on the Frontier: Pakistan, Bangladesh Top Picks

One country benefits from Chinese investment, and the other is growing its way out of poverty.

In developing-market investing, the cool kids are “emerging” and the wannabes are “frontier.”

The indexers at MSCI decide who’s cool and who’s not after analyzing a market’s liquidity and openness to foreign investment, among other factors. Where a country is placed can make or break local markets—and the exchange-traded funds that track them. Last year, Pakistan was a big winner, with a 33% gain after MSCI...